Views and analysis of Chinese politics and policy from inside China, outside the Beijing and Shanghai beltways

Thursday, 12 May 2016

Two Commentaries, Two Visions, No One Way Forward

There’s been a
lot of discussion lately about China’s growing economic challenges and what two
clearly authoritative commentaries that appeared in People’s Daily—one
here and also a January speech by President Xi Jinping that finally
appeared here—actually
mean for those problems.

For many
analysts, these twin events signal deeper dissension in Beijing, and yet
another sign of crisis for the country.In short, the usual themes of “China is at the crossroads”; “China’s
approaching a crisis”; “the Chinese collapse is around the corner”, “economic
forces that are about to burst forth and bury the Chinese government”; or some
such unhappy tidings and predictions.

The common
thread in all of these forecasts seems to be, as ever, that “China can’t hold
on much longer”.

Except China
always does.Beijing either solves the
problem—somehow—or keeps getting away with not doing so.The reckoning that so many talk about seems
to get postponed, or really wasn’t a reckoning to begin with.

Leaving aside
for the moment why that’s been the case (as well as why those predicting doom
for China are like meteorologists on meth and never held accountable for their
missed forecasts), what’s happening here?

The appearance
of the summary and Xi’s speech are noteworthy, to be sure.

But they’re not
purveyors of good or bad economic news in themselves, so much as another
chapter in the larger political challenge of getting Chinese officials to make
up their mind which policies—and which person—to support, and what happens when
they don’t.

That both the
commentary and Xi’s speech were featured on successive days in People’s Daily is evidence that there’s
a high-level debate in China about what’s wrong with the economy.The challenges that are identified in the
pages of People’s Daily (as well as its website) are always ones that leading
Communist party members think need attention.After all, the newspaper is a codebook for cadres--for party officials
to dispense information and to establish direction, as well as seek
feedback.Cadres dissect the paper (and
increasingly its website) for clues
about discussions, debates, and directions in policy.(When they’d fail to do so, they’re
chastised.) Therefore, printing and positioning both of
the pieces noted above with such prominence is significant because it’s a
well-defined attempt by the leadership to highlight their current thinking
about China’s economic problems.

While the two
pieces can be thought of as a set, it’s more useful to unpack them.

The “authoritative
commentary” that graced the front-page of People’s
Daily and occupied the entire second page in this past Monday’s edition is
a laundry list of the low-lights of China’s economic performance.It’s very much a summary--representing the
current consensus in Beijing that what worked for China before isn’t working so
well now.The commentary captures the
current condition of China’s economy affairs, which is clearly not very good or
very promising.But while the piece
outlines the parameters and the goals of economic policy, it doesn't specify
remedies.

Xi’s speech is a
very different document.The speech is really
a dissertation of China’s economic development and the progress made by other
countries by which Beijing has often measured itself (parts of which are
clearly drafted by advisors, probably from outside).The speech is also an attempt by Xi to
describe how China got to where it is presently, an effort to explain his own thinking
about China’s options.

At the same
time, the tone of Xi’s speech (or talk or presentation—it’s not entirely clear
what, and some of it reads like a pastiche) is rather wary--of explaining why
certain decisions were made and describing where matters are now. Indeed, the document reads as somewhat
self-justifying; as if Xi has been asked to defend why China’s economic
circumstances are where they are and what they are presently.

And thus we get
to the part about why these “authoritative commentaries” are ultimately about
politics.

Xi probably
adopted this protective posture because he’s not been at all comfortable
talking about economic matters, except in the most general terms.For economics and finance are really Premier
Li Keqiang’s realm, and there’s already tension between Xi and Li (actually, for
some time now) because while Xi and Li aren’t in a struggle for power (both
already have power), they are competing intensely over who
offers the better solution for China.

There’s Xi’s
vision, which prescribes ideology as the cure and reconnecting the Chinese
State to the Chinese Society through party reform.

Then there’s Li’s
notion, which insists that the government’s ability to rule rests largely on
Beijing’s successful management of the economy.

This tension
isn’t a partition of responsibilities as it was under Xi’s and Li’s
predecessors, but a real divide which many officials—national and local--have
been suffering with for a while now.

It’s becoming
very tough for bureaucrats in Beijing and cadres in provinces and localities to
know how to act--what projects to move forward with; which ones being discussed
should be abandoned; and whether the anticorruption campaign will continue or
finally be called off.As important as
Xi’s crusade against graft had been in caging “tigers” (high-level officials),
the uncertainty it created at lower levels often
put a stop to local initiatives for fear that cadres there would be labeled
as corrupt “flies”.

So when local
officials look at Beijing and see Xi focusing on political discipline and
loyalty, while Li is emphasizing administrative efficiency and fiscal reform,
they’re confused at what they themselves are supposed to be doing.The result of this political divide between
Xi and Li is a stubborn paralysis in local policymaking.

What’s needed isn’t
so much another economic stimulus package, but a political jumpstart.The only way to achieve that outcome is for
either Xi or Li to win the argument.But, right now at least, China and its cadres are left with two
documents, articulating two different descriptions, and each side looking to
solicit the views of officials in an effort to break the policy impasse. There’s
no clear winner and no well-defined way forward, at least where economic reform is concerned.